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Clear Thoughts
Predictions For The Year?
| Seeing through the looking glass is only hypothesis |
The year 2006 is already off to quite a start. The S&P 500 is up 2.84%, yet the market experienced its largest one day drop in three years last Friday. We have read all sorts of predictions about the Dow ending the year anywhere from 8,500 to 14,000.
This week we have seen economic news surprise the market almost daily. Is there a slowdown? Has the Fed raised interest rates enough to cool off the economy? Will the retirement of Alan Greenspan put an end to rate hikes? Has the economy cooled off too much? Is housing really slowing down or are the record profits and raising of earnings guidance by select builders weeding out the winners from the losers? Is the price of oil driven by inventories, threats from Iran and OPEC or the weather in New York? How important is the price of oil, and is it so overpriced, when adjusted for inflation, compared to the prices we paid in 1970?
With earnings season upon us and most public companies reporting new data, many people think that these weeks are very exciting at Clear Asset Management. As with most predictions, they are right and wrong.
As investment managers, we follow economic and geopolitical events as they unfold. What we do not do is overreact, second guess and try to follow trends. Simply put, we do the same thing we do every market day; follow the market and news real-time, and invest based on our algorithms.
The S&P 500 is up 2.84% as of the close of market today, and our six core portfolios are up an average of 9.93%. Why? We have a discipline that allows us to own only the top 1% of stocks that our algorithms calculate to be the most likely to produce benchmark beating returns.
Yes, there are more changes to the portfolios during earnings season as new data is crunched and compared to all 10,000+ public companies and U.S. traded ADRs. Our trades do not create excitement for us; they simply prove that our algorithms are doing what they should; finding the best opportunities based on the latest data.
Some may find it boring that we do not make grandiose predictions. But our investment methodology is simply programmed to perform, not to prognosticate. That is our job. We make investment decisions without emotion and clearly communicate them to you.
Have a nice weekend.
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